General Electric stock jumped Thursday. Good news about cash and cash flow helped.
On Thursday, GE (ticker: GE) shares rose 1.8%, closing at $115.65, the second-highest closing price of the past 12 months. (Shares closed at $117.16 on July 25.)
The market gets some of the credit for the stock's rise. The S&P 500 and Dow Jones Industrial Average added 0.8% and 1%, respectively. Management gets some credit, too. Rahul Ghai, CFO of GE's aerospace business, spoke at the Morgan Stanley Laguna Conference on Thursday.
"As we sit here today, the Aerospace services continues to do well. Renewables and power are on track," Ghai said. "So we think we are tracking to the higher end of our earnings per share and free cash flow guidance for the third quarter."
Third-quarter earnings per share were expected to come in between 45 cents and 55 cents. Wall Street is projecting 55 cents. Analysts are already at the top end of the range.
Third quarter free cash was expected to be flat year over year. Free cash flow in the third quarter of 2022 came in at about $1.2 billion. Wall Street is projecting free cash flow of about $900 million for the current quarter.
There was also news about the coming spin of GE Vernova , GE's power generation businesses, slated for early 2024. Vernova will start life with more cash than debt. GE wants the business to have an investment-grade credit rating when it becomes an independent company. That should help.
After the spin, there will be GE Aerospace run by Larry Culp , GE Vernova run by Scott Strazik, and GE HealthCare Technologies (GEHC), run by Peter Arduini. GE HealthCare is already a separate company. It completed its spin in early 2023.
When the breakup of GE is complete, the three remaining businesses should be investment-grade credits with strong franchises in their respective industries.